Outlook The CNN Fear & Greed Index has swung from Extreme Greed in July 2025 to Extreme Fear in mid-November.1 While the index is driven primarily by technical indicators—such as market momentum, breadth, options activity, and volatility—there is also a market or economic story to complement such a change. Since July, several developments have contributed to the shift in sentiment. The proposed 100% tariffs on Chinese imports and a temporary U.S. government shutdown introduced meaningful uncertainty. During the shutdown, official economic releases were paused, and private-sector labor data that emerged in the interim tended to show softness. Further, Federal Reserve voting members were divided on the economic outlook, resulting in a split vote on rates. Taken together—labor-market ambiguity and a lack of policy consensus—investors have begun to reassess the valuations of many market leaders. Despite fear becoming the dominant emotion among market participants, we remain optimistic for now. We expect uncertainty to ease as official labor-market data resumes on Thursday, providing a clearer read on employment conditions. Further, we view many of the other primary and updated statistics as constructive towards continued growth. For example, both the Weekly Economic Index put out by the Dallas Fed remains positive as does the Atlanta Fed's GDP Nowcast. Finally, corporate earnings have been strong this quarter, with 82% of S&P 500 companies beating estimates.2 That said, our attention remains focused on two areas. First, the labor market, where this week’s data will be critical in confirming whether recent soft signals were temporary or something more structural. Second, corporate guidance, which has been mixed; among companies issuing forward outlooks, negative guidance has outpaced positive guidance so far this quarter.
We continue to monitor these developments closely and will adjust our positioning as the data becomes clearer.
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The U.S. equity markets performed mixed over the prior week. The broad-based benchmark, S&P 500, squeezed out a marginal gain (+0.1%), the blue-chip Dow rose (0.3%), while the tech-heavy Nasdaq slid slightly lower (-0.5%). Sentiment was boosted by the U.S. government shutdown ending, the longest in history, lasting 43 days. A funding bill was passed on Wednesday that will extend operations through January 30, 2026. Meanwhile, hawkish comments from Federal Reserve speakers and continued pressure on AI stocks and the technology sector regarding capital-expenditure spending and stretched valuations offset momentum. Policymakers, including Susan Collins, president of the Federal Reserve Bank of Boston, and Raphael Bostic, president of the Atlanta Fed, cautioned against a third straight cut next month, after highlighting previous interest rate reductions in September and October. The two officials noted that while the economy is resilient, inflation remains elevated, and the labor market has weakened (citing slow hiring, although layoffs appear muted). Bostic explained that gaps in economic data from unreleased reports have made it difficult to interpret the current state of inflation and the labor market and to form an economic outlook. Nonetheless, with the shutdown over, economic data is set to return. Notably, the Bureau of Labor Statistics confirmed the release of the highly anticipated September nonfarm payrolls (jobs) report this Thursday.
[1] https://www.cnn.com/markets/fear-and-greed [2] https://www.factset.com/earningsinsight
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